Shipping Crisis is Over, Says Hapag-Lloyd

The rate development is satisfactory, also the balance between supply and demand in transport capacity has stabilised lately, and bunker oil pricrs remain on an acceptable level. Clear
indicators for H-L commander Rolf Habben Jansen that the eight year lasting severe shipping crisis shaking up the entire maritime industry fundamentally has come to an end.

H-L CEO Rolf Habben Jansen at the press meeting last week – photo: nh

Most of the basic economic parameters point in the right direction, stated Rolf Habben Jansen in a Hamburg-held meet with journalists last week. Since July of 2014, the Dutch national is Chairman
of the Executive Board of shipping line Hapag-Lloyd AG.Capacity down, rates up
Rolf’s optimism is nourished by the ongoing scrapping wave in container vessels, leading to a capacity reduction of one million TEU on a global scale during the past 12 months. At the same time
only a volume of 250,000 TEU were put into the market by newly built container ships. Result: the long-lasting overcapacity was lowered remarkably, easing the pressure on rates. Simultaneously,
the mergers of shipping lines have also slowed down the fleet growth. Said Habben Jansen: “Without this concentration, quite a number of new ship orders would have been placed,” thus cementing
the overcapacity and sending transport prices further south.” This also applies to his own enterprise: “If we hadn’t merged with the UASC, we would have been forced to order a number of new
vessels,” the manager stated.

Balanced structure
The combination of the above mentioned key parameters have caused global markets to re-approach a balanced structure in supply and demand, leading to stable fares container lines like Hapag-Lloyd
are currently able to generate on most intercontinental shipping areas. The H-L boss expects this trend to last, driven by annual growth rates in transport demand in the region of three to four
percent on average.
In view of the estimated positive factors, Habben Jansen does not expect further insolvencies such as the Hanjin bankruptcy to happen in the near future.

Bright light on H-L’s horizon
Asked about his company’s own business situation, the Hapag-Lloyd CEO delivered the 40 media people that attended the press event a cautiously optimistic outlook. Particularly, the merger with
the Arabian shipping line UASC, which was inked in May and adds 58 fairly young vessels to H-L’s fleet, dropping the combine fleet’s average age from 9 to 7.2 years, puts the tradition-rich
shipping line in a favourable position to weather future storms. Once the integration is completed, which is expected to happen at the end of Q3 this year,
the unit costs will go down substantially, Rolf announced. He referred to a similar development experienced a year ago after the Chilean shipping line Compañia Sud Americana de Vapores (CSAV) was
acquired. “The mergers, the pleasing market situation and our diversified fleet structure will enhance our competitiveness and strengthen our position on major operating areas like
Europe-Fareast,” he noted.

No financial forecast
However, the manager left open if these generally positive prerequisites will suffice to bring his company back into the black after posting an operating loss of €62.1 million in Q1 of 2017. A
financial forecast is only possible after the UASC merger has been completed, he stated.
According to the CEO, the merger with UASC will generate annual synergies of €435 million from 2019 onwards.
Today, the combined H-L / CSAV / UASC fleet comprises 230 vessels, offering a transport capacity of about 1.6 million TEU. The 58 vessels belonging to the former inventory of the Arabian company
will be gradually repainted, displaying the traditional Hapag-Lloyd orange colour on the ship’s funnels, ornamented with a stylized HL image.
Finally, Habben Jansen expressed his hope that the deepening of the river Elbe for enabling 20,000 TEU vessels to call at the port of Hamburg will be realized soon. So far, environmentalists have
deferred this dredging project. In addition to the urgently needed fairway adjustment the expansion of the rail and road hinterland connections must be treated as a priority by Hamburg’s
politicians, Hapag-Lloyd’s CEO added as request to his wish list.